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The Honorable Arnold Schwarzenegger Governor, State of California State Capitol Sacramento, CA 95814 I request your VETO on AB 504 (Swanson), which inappropriately imposes new employer liability that could increase the cost of doing business in California by providing a new definition of lockout that requires an employer to pay restitution to employees. I oppose this broad application of excessive restitution to employees while remaining silent on union misconduct related to a lockout. This bill would require an employer to pay restitution in the form of wages and benefits under a broad set of circumstances. The circumstances for employer liability would unreasonably apply to all locked out employees for the entire period of the lockout if an employer is convicted of any of the identified misconduct related to any part of the lockout. The provisions of this bill would nullify an entire lockout for any one of the actions specified in this bill. In a labor dispute, lockouts may be considered by the employer in response to situations in which employees choose to strike, employ intermittent slow downs or work stoppages or do not approve a final contract offer. Lockouts are allowed under federal and state law and have been used by a variety of employers. Under current law, an employer violation of the laws related to using strikebreakers and lockouts may result in a fine or imprisonment, or both, and provides for restitution to employees when a lockout is determined to be unlawful. The penalties associated with breaching the laws provide protection against unwarranted actions on the part of the employer. In fact, recent history shows that violators are held liable for their actions. We believe current law and remedies available through the courts are sufficient penalty for illegal actions, and employees and their unions may avail themselves of existing avenues to seek restitution. AB 504 (Swanson) will add excessive and unreasonable liability for employers while creating a broad new definition of Lockout in Labor Code Section 1138.7, which is different from and in addition to the definition provided under existing law (Labor Code Section 1132.8). For these and other reasons, I request your VETO on AB 504 (Swanson) when it comes before you for consideration.